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Why has capitalism not collapsed?

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Comments

  • #32
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    The Corinthian wrote: »
    Sorry, but that's simply not true. What you're suggesting is that once currencies became free floating, we could have all just started printing money to pay off our debts but didn't for political reasons - there's not only no evidence of this whatsoever, but plenty that points to inflation, especially against other currencies, having been a primary concern.
    No, I didn't say anything about paying off debts, you're attacking a straw-man there.
    The Corinthian wrote: »
    Actually it is, because while money creation strategies have been employed (QE recently or Greenbacks to cover some payments for the American Civil War) they have all been temporary and limited in scope. Printing our way out of the present crisis would not be, which is precisely why such an approach has not been used.
    You were contesting by saying that use of public money creation has not been tested before, and it has, without problem, so unless you have an argument as to the exact bad thing you expect to happen, it is pretty much proven, and your arguments amount to FUD.
    The Corinthian wrote: »
    I've already pointed out private banks don't 'create' money, if they did they'd never go bust.
    Yes they do. Banks extend loans before shoring up reserves (that is, they have a two-week window typically, to fix-up their reserves on the interbank market, or by going to the central bank), and no central bank refuses to shore up a banks reserves.

    Money is endogenous, not exogenous.
    The Corinthian wrote: »
    Secondly, of course it's about inflation management and our knowledge of that has very much established that such practices have limited scope before the negative effects overcome the positive ones.
    You're just asserting this without any backing; if government spending is limited by an inflation target, what exact bad thing do you expect to happen?
    The Corinthian wrote: »
    That's not actually money creation, that's the sale of a financial product.

    Yet it is the central and not the private banks who creates the money, and decides how it is introduced into the economy as a means of executing monitory policy (and replace old notes and coins).

    I'm sorry, but you are mixing up lots of different things here.
    See above, on endogenous money; you don't know how the monetary system works.


  • #33
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Also, hatrickpatrick posted this link a long time ago, which gives a good alternative perspective on the issue, and also is another example of this successfully being put in place:
    http://kentfreedommovement.ning.com/profiles/blogs/the-magic-isle-of-guernsey-by-bill-still-director-of-the-best-doc

    That guy, Bill Still, is actually a Libertarian, who competed with Gary Johnson for nomination as the presidential candidate for 2012.


  • #34
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    I know this is a little OT but anyone have any predictions for what will happen on Friday when the Russians and Cypriotst take out all their money?


  • #35
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    That's hard to know really, it's not yet certain what is actually going to be decided on with Cyprus yet, so it could go any which way.

    If Cyprus rejects the bailout, their banking system will collapse (and that might have knock-on effects elsewhere in the EU), and if they go ahead with the bailout while still taking a cut out of depositors < €100,000, then what happens will depend on the psychology of the Cypriots, whether or not they will think it a good idea still to withdraw the remainder of their money (which many probably will), which will be inherently unpredictable and could further damage the Cypriot banking system (possibly with further damage/contagion elsewhere, but the possibility and extent of that being unpredictable).

    I don't think there are going to be any immediate effects outside of Cyprus, but I do think that (if they go ahead with hitting depositors < €100,000) all future instances of economic trouble in the EU, are going to cause a greater risk of bank runs in the troubled countries (the extent of which would be totally unpredictable, as it's entirely down to psychology and social trends).


  • #36
    Leslie Little Cashier
    Posts: 81,310 CMod ✭✭✭✭ Leslie Little Cashier


    clairefontaine wrote: »
    ^ Eh.... banks invent money all the time... it's known as credit. And yes they do go bust, unless the tax payer bails them out.

    A leverage multiplier is not creating money. And yes they do go bust - because they can't create money


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  • #37
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    Then what else is a credit card but imaginary money?


  • #38
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Here is a good article, explaining how the money multiplier is not actually real, and elaborating in much more detail on my post above, how it actually does work:
    http://www.businessspectator.com.au/article/2012/10/22/commodities/myth-money-multiplier

    That specifically deals with describing how credit cards work as well, and dips into how fixing up reserves works.


  • #39
    [Deleted User]
    Posts: 12,694 ✭✭✭✭ [Deleted User]


    The conclusions I have come to.

    Capitalism is a flexible basic system.

    Its capable of absorbing other ism's and is compatible with democracy.

    In the rich west capitalism provides a reasonable standrd of life for the majority so there is no impetus for change.

    The alternatives are too idealogical.


  • #40
    Three Seasons
    Banned (with Prison Access) Posts: 548 ✭✭✭Three Seasons


    clairefontaine wrote: »
    Then what else is a credit card but imaginary money?

    No it's not imaginary money. The credit card company pays for your goods and then you pay them back.

    Banks don't create money either, they lend you money which exists. Then you are supposed to pay them back.


  • #41
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Banks lend out money first, and if they go beyond their reserve limits, they shore that up later on the interbank market, or go to the central bank (who won't refuse to shore it up for them); banks lending does lead to the creation of money, it's described at length in the article I posted in post #38.


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  • #42
    Permabear
    Closed Accounts Posts: 39,019 ✭✭✭✭Permabear


    This post has been deleted.


  • #43
    Three Seasons
    Banned (with Prison Access) Posts: 548 ✭✭✭Three Seasons


    KyussBishop wrote: »
    Banks lend out money first, and if they go beyond their reserve limits, they shore that up later on the interbank market, or go to the central bank (who won't refuse to shore it up for them); banks lending does lead to the creation of money, it's described at length in the article I posted in post #38.


    Banks lending leading to money creation is completely different to banks creating money.


  • #44
    fleet
    Registered Users, Registered Users 2 Posts: 542 ✭✭✭fleet


    johnnyskeleton wrote: »
    Even with a recession, Irish people are still richer and more free than ever before. If you want to look at slavery and poverty, look at a socialist country such as Cuba, Venezuela or china.

    Nice thread guys. I would disagree with the above thought, in relation to China specifically. China is possibly the most capitalist country on the planet. Everything is for sale here. You want to make some money? Open a street stall. No licence, no OH&S, no food safety concerns. It's only the inherent corruption here that holds it back from being the pinnacle of free market, but that doesn't directly impact small businesses or consumers.


  • #45
    [Deleted User]
    Posts: 12,694 ✭✭✭✭ [Deleted User]


    Permabear wrote: »
    This post had been deleted.

    Did I say socialism or communism were the only options for change, I do not see a huge amount of support for libertarianism either.


    There could be other political/economic systems that we as humans have not thought about yet, because we are not developed enought.


  • #46
    Permabear
    Closed Accounts Posts: 39,019 ✭✭✭✭Permabear


    This post has been deleted.


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